The National Company Law Tribunal’s Guwahati Bench has extended the last date for the corporate insolvency process for Assam Company (India) Ltd. to July 23, 2018.
This is the first major tea company to face insolvency proceedings. Significantly, industry players have expressed apprehension that other tea companies may also face similar proceedings.
ACIL has tea and oil and gas business with 16 gardens in Assam, with an output of 11.1 million kg recorded in 2016, which dropped to 9.7 million kg in 2017. A similar drop was also evident in ACIL’s revenue for the nine-month period ending December 2017 when revenues stood at ₹153 crore against ₹190 crore a year ago. Losses widened to ₹42.7 crore against ₹16.5 crore a year ago. The liquidation proceedings are under the National Company Law Tribunal’s Guwahati Bench. Sources said at least four big tea companies, with gardens in Assam and West Bengal, and a petrochemical firm had filed expressions of interest with the Resolution Professional.
Dhunseri Tea chairman C.K. Dhanuka said this would help his company expand its presence. Dhunseri has gardens in Assam and Malawi in Africa, with total production of 21 million kg. Vinay Goenka, chairman, Warren Tea, too confirmed his firm’s interest.
Tea Board Chairman Prabhat K. Bezboruah, also the MD of Bokahola Tea Company, said the organised tea sector was facing challenges. A recent paper on the Assam industry by the Consultative Committee of Plantation Associations said cost increases had outpaced the growth in prices and that this posed a major challenge.
“There is a viability issue as prices have not risen in tandem with operational costs of production,” said Arijit Raha, secretary general of the Indian Tea Association.
However, some industry veterans, speaking on conditions of anonymity, said the industry, on its part too, had failed to raise yields. While a few more big firms may face bankruptcy proceedings, the trend was unlikely to become pervasive, they said.